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PSBs need Rs 2.06tln capital for 8-9% credit growth in FY19

Friday, February 09, 2018

Public sector banks may need capital of Rs 2.06 trillion for a credit growth of the 8-9% in the financial year 2019, says a report by India Ratings and Research.

In October last year, the government had announced a Rs 2.11 lakh crore bank recapitalisation plan spread over two fiscals, 2017-18 and 2018-19. Out of this, the government last month said it would infuse Rs 88,139 crore capital in 20 public sector banks (PSBs) before March 31, 2018.

"The recapitalisation amount from the government will go towards sustaining the banks. For a higher growth state-run banks may need more capital. We estimate state-run banks' capital requirement of Rs 2.06 trillion at a modest credit expansion of 8-9% in FY19," India Ratings and Research senior analyst Udit Kariwala told a reporters here yesterday.

This amount factors in around Rs 1.4 trillion of capital needed for Basel III transition (Rs 0.67 trillion of common equity tier (CET) 1 requirement and Rs 0.76 trillion of additional tier (AT) 1 requirement).

It also includes Rs 0.63 trillion of one-time provisioning for migrating to the expected loss regime on transiting to Ind-AS 109 on April 1, 2018.

It said the profit and loss account for most state-run banks would also be under pressure due to accelerated provisioning requirement on the cases identified by the regulator to be referred to the National Company Law Tribunal under the Insolvency and Bankruptcy Code in FY18.

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